March 29, 2017
By Melanie Senior
When it comes to drug pricing, one size certainly doesn’t fit all. Biopharma firms need to devise and design appropriate pricing and commercial strategies for payers, a group of customers that don’t all care about the same things and, in some cases, whose needs may be diametrically opposed.
Whatever President Trump says today or does tomorrow, pressures on drug pricing aren’t likely to ease any time soon. Payers will continue to push back on prices for both specialty and chronic care treatments and restrict their use to narrower patient groups. If Trump-supported plans to enable faster FDA approvals gain traction, pushback on coverage for new drugs will become even more aggressive. Payers will then cite limited efficacy data as a reason to curb uptake.
Yet notwithstanding this apparently uniform pressure on prices, US payers aren’t all equally sensitive to pricing across every therapy class. The US payer landscape is highly complex and fragmented, and will remain so. That complexity makes life challenging for biopharma firms, but also provides opportunities. These firms need to devise and design appropriate pricing and commercial strategies for a group of customers that don’t all care about the same things (and, in some cases, whose needs may be diametrically opposed). When it comes to drug pricing, one size certainly doesn’t fit all.
Indeed, not even an adjustable size-range fits all. Consider outcomes-based contracts. These attempt to tie some measure of a drug’s outcome to the price paid for it, theoretically resulting in lower prices if a drug doesn’t work well. They are an increasingly popular tool; new drugs like Novartis AG’s Entresto (sacubitril/valsartan) and cholesterol-lowering Repatha (evolocumab) and Praluent (alirocumab) are all the subjects of outcomes-based deals. Some pharma CEOs who met with President Trump on January 31, 2017, pointed to such deals to support arguments as to why further government intervention on pricing was unnecessary. The Duke Margolis Center for Health Policy has set up a multi-stakeholder consortium to address how to reduce the regulatory burden on such deals. (Also see “Value-Based Contracts: Relief From Regulatory Barriers In Sight?” – In Vivo, 13 Feb, 2017.) “These agreements are the right thing to do,” argues Michael Sherman, MD, chief medical officer at Harvard Pilgrim Health Care Inc., which has six outcomes-based deals. Even without concrete data, as yet, on how much they’re saving, Sherman wants these arrangements to evolve further. “I would like to see a greater portion of the drug cost at risk, particularly for high-cost conditions in which there is a variable response on the part of the patient,” he says.
But not all payers are interested in all such contracts, or all flavors of them, notes Roger Longman, CEO of Real Endpoints, a reimbursement analytics firm. (Editor’s note: Real Endpoints has partnered with In Vivo‘s parent company Informa.) For example, only those plans financially incented to keep down total health care costs – not just drug costs – would want to bother with the administrative burden of an outcomes-based deal focused on reducing medical expenses (e.g., hospitalizations). Even then, the downstream cost savings would have to materialize within the time frame in which the payer is likely to cover any particular beneficiary. Medicare Advantage and certain commercial health plans fall into this category, Longman adds.read full article >
Payer & Channel Insights, Marketing Analytics & Business Insights
NorthEastern Region, Top 20 Pharma
Executive Team Lead
Top 5 Pharma
Sr. Marketing Director
Top 10 Pharma
Top 5 Pharma
National Business Director
Top 5 Pharma
Specialty Access Solutions, Top 5 Pharma
Director of Operations
Reimbursement and Patient Support Services, Top 20 Pharma
Chronis H. Manolis, RPh
Vice President, Pharmacy UPMC Health Plan
Global Value/Market Access Lead Oncology Portfolio & Global Commercial Lead Oncology Biomarkers Halozyme Therapeutics, Inc.
President , GlaxoSmithKline U.S.
Michael S. Sherman, MD, MBA
Senior Vice President and Chief Medical Officer, Harvard Pilgrim Health Care